Archive for the ‘Termination of Post-Grant Proceedings’ Category

Board Guidance on its View of Petitioner Estoppel: Westlake Services v. Credit Acceptance Corp:

Tuesday, July 21st, 2015
July 21, 2015

Last week, the Board provided an opinion to offer guidance on its view of the scope of petitioner estoppel.  The Westlake Services v. Credit Acceptance Corp. decision relates to the scope of estoppel to a Petitioner following a final written decision from a first petition.  Westlake Services v. Credit Acceptance Corp., CBM2014-00176, Paper 28 (PTAB May 14, 2015). 

This case addresses the question of the scope of Petitioner estoppel when only part of the claims in a CBM proceeding are instituted for trial.  In short, the first petition set forth grounds to challenge the patentability of all claims of U.S. Pat. 6,950,807.  Only some claims were instituted for trial.  Later, the Petitioner filed another petition to challenge claims that were not instituted for trial in the first proceeding.  A final written decision was issued by the Board in the first proceeding finding the instituted claims unpatentable under § 101, and the Patent Owner sought to block the second petition based on petitioner estoppel under 35 U.S.C. § 325(e)(1):

The petitioner in a post-grant review of a claim in a patent under this chapter that results in a final written decision under section 328(a), or the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that post-grant review.

The Patent Owner obtained permission to brief the Board with its reasons why the Petitioner was estopped from filing the second petition.  The Patent Owner argued that § 328(a), provides “[i]f a post-grant review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.”  In this case the Patent Owner wanted estoppel to apply to all claims to prevent Petitioner from coming back for a second bite on the claims that were not instituted for trial.  After all, the petition was trying to challenge every claim of the patent and the Board did not institute on several claims.  So the Patent Owner relied on this language to assert that the estoppel arising from the Final Written Decision applied to all claims.

Here is the Patent Owner’s logical syllogism:

A.  The Petition challenged all claims.

B.  § 328(a) provides a Final Written Decision is with respect to “any patent claim challenged by the petitioner.”

C.  Therefore, the Final Written Decision applies to all claims, even though institution was only to a subset of the claims.

D.  § 325(e) provides estoppel to all claims because the Final Written Decision is to all claims in (C) above.

E.  Accordingly, Petitioner is estopped from challenging all claims.

The Board denied the Patent Owner’s logic.  Essentially, it determined that § 328(a) and § 325(e) apply on a claim-by-claim basis, and therefore estoppel applies only to the claims instituted for trial.  The Board wanted to clarify estoppel applies only to a claim in a patent that “results in a final written decision” under § 328(a).  So the Board’s logic is different:

A.  The Petition challenged all claims.

B.  Trial was instituted to only some claims.

C.  The Final Written Decision under § 328(a) is only to the instituted claims.

D.  § 325(e) provides estoppel to “a claim in a patent” that “results in a final written decision” under § 328(a), therefore estoppel is only to the instituted claims.

E.  Accordingly, Petitioner is estopped from challenging the instituted claims.

The Board’s guidance about the scope of estoppel allows all parties to make informed decisions about how to better litigate their cases.

The Settlement Effect of PTAB Proceedings and Recent Patent Office Trial Statistics

Monday, December 29th, 2014

December 29, 2014

The Patent Trial and Appeal Board (PTAB) released statistics for AIA Patent Office trials as of Dec. 18, 2014.  Different commentators have recently reported that the institution rate for these proceedings has dropped to about 60-70 percent, depending on how you calculate it.  Those familiar with PTAB trial practice (IPR, CBM, PGR and derivation proceedings) understand that the trial statistics are moving targets, but they do provide some insight to interesting trends.

Based on the Dec. 18, 2014 data provided by the PTAB, it appears that the rate of denied petitions is approaching the rate of party settlements.  If the denial and settlement data are normalized to the number of filed trials (excluding the filings prior to decision on institution), the statistics show about a 20:20:60 percent relationship between settlements, denied proceedings, and instituted proceedings (ones that do not settle), respectively.  That means for every five petition filings, approximately one proceeding will be denied, one will settle early, and three will complete their trials.

But the filing of a petition is not always required to reach settlement between parties — the threat of a petition can provide all the impetus needed for settlement between parties.  This settlement effect of PTAB proceedings provides another opportunity for parties to attempt to settle their differences prior to the formal filing of an IPR, CBM, PGR or DER petition.  Frequently, the petition will be prepared to posture the matter for final discussion prior to its filing.  Once filed, the petition serves as valuable information for all other stakeholders interested in defeating the Patent Owner and its patent.  So a Patent Owner with some concern about the patentability of its patent has an incentive to settle with the prospective Petitioner before any petition is filed.

Of course, the PTO statistics cannot account for the cases where parties settle without filing a petition (“non-filed settlements”), so if the number of non-filed settlements is significant, then the PTO statistics underestimate the overall efficacy of post-grant proceedings for settlement of disputes between parties.

If you poll attorneys actively filing these petitions about the number of non-filed settlements they have accomplished compared to the number of petitions actually filed, you will get very different anecdotal responses.  Depending on that number, the impact on settlements of disputes in general (both formal proceedings and prior to formal proceedings) can be significant.

The following table shows how the settlement ratios change using different percentages of the number of matters that settle without any petition filing (percentage of non-filing settlements to that of post-filing settlements).  For example, if you estimate that for every 5 filed petitions, about 1 settlement occurs without a filed petition, refer to the 20% entry in the table below to find the aggregate percentage of disputes settled (including both pre-filing and post-filing disputes).  Using this 20% estimate, the aggregate percentage of disputes settled rises to roughly 33%, the percentage of denied cases drops to roughly 15%, and the percentage of matters going through full trial drops to roughly 48%.  This means for every six disputes, roughly two will settle (one with and one without a petition), one will be denied, and three will complete their trials.  Thus, by viewing disputes from a settlement perspective, including settlements obtained without filing a petition, the aggregate denial and institution rates necessarily fall and the efficacy of the challenges from an overall dispute perspective is enhanced, regardless of the win:loss ratio experienced by the parties at trial.

Of course, this is only a crude first approximation of settlement dynamics.  More information is needed to know the magnitude of the settlement effect of patent office trials on party settlements.  That information will be difficult to ascertain due to the confidential nature of such settlements, but each stakeholder can make its own approximation based on its experience.  Regardless, these settlements amplify the efficacy of the PTAB proceedings and their effect can be as significant as the known settlements arising from the PTAB proceedings themselves.

Table 1

USPTO Statistics Show Inter Partes Patent Reviews are Frequently Settled Before Final Board Decision

Monday, February 17th, 2014

The U.S. Patent Office regularly posts statistics on post-grant proceedings such as inter partes review and covered business method patent review.   An excerpt of PTAB statistics for February 13, 2014 is found below.  The acronyms “FWD” and “RAJ” stand for “Final Written Decision on the merits” and “Request for Adverse Judgment.”  The “Other” category includes terminations due to dismissal.

IPR Stats for 2-13-2014

The number of trials with a final written decision on the merits (FWD) remains relatively small because IPR proceedings take roughly about a year and a half from filing of a petition to conclusion, and the AIA provision allowing IPRs is only about 17 months old.

Interestingly, the data shows a relatively high number of settled IPR proceedings.  These settlements can occur any time after the filing of the petition and before a final written decision on the merits.  Therefore, these settlements are made within months of the Petition filing rather than years.  Of course, all settlements are not equal.  Some result in the termination of both the Patent Office proceeding and the concurrent District Court litigation. Others may only  terminate the Patent Office proceeding.  And, as discussed in earlier posts, some settlements may dismiss the Petitioner from the Patent Office proceeding but maintain the proceeding against the Patent Owner.  Regardless, early settlements often favor the Petitioner and provide a “win” for the Petitioner.  And even if that is not the case, settlements executed before a final decision on the merits provide another opportunity for early discussion and resolution of patent disputes.

It should be noted that IPRs are responsible for more settlements than can be provided by these statistics, because many disputes are resolved by settlements achieved prior to any filing of IPR petitions (i.e., in cases where the Patent Owner is afforded an opportunity to settle before an IPR petition is filed).

It will be some time before more accurate statistics on IPRs will be available, however these settlement statistics show that parties can achieve some resolution of patent disputes very early in post-grant proceedings, and likely much earlier than in traditional litigation time frames.

Patent Office Board Takes a Bite out of Apple’s IPR Challenge of VirnetX Patents

Thursday, December 19th, 2013

In  mid-2013 Apple filed seven inter partes review petitions to challenge four VirnetX patents.  Recently, the Patent Trial and Appeal Board (the Board) denied all seven inter partes review (IPR) petitions.  This outcome demonstrates the Board’s current interpretation of the one-year bar applied in IPR proceedings and its position on joinder of petitions.

Apple’s Interpretation of the One Year Bar

Apple disclosed that its petitions were filed more than a year after service of a complaint asserting infringement of the subject patents, and understood that the petitions might be challenged depending on the Board’s interpretation of 35 U.S.C. § 315(b) (the statute barring IPR petitions filed after certain assertions of infringement):

Petitioner notes it was previously served with a complaint asserting infringement of the ’135 patent in August of 2010, which led to Civil Action No: 6:10-cv-417. During that action, the District Court established an additional civil action, Civil Action No. 6:13-cv-00211-LED, on February 26, 2013 (also pending in the Eastern District of Texas). The August 2010 complaint does not foreclose the present petition, as Patent Owner served a new complaint on Petitioner asserting infringement of the ’135 patent in December of 2012.

Apple Inc. v. VirnetX, Inc., et al., IPR2013-00348, Paper 1 (June 12, 2013), at p. 1 (emphasis in original).  Similar disclosures can be found in the other six related petitions:  IPR2013-00349, -354, 393, -394, -397, and -398.

Apple anticipated that the 2010 complaint service might cause a concern and argued that the 315(b) bar should not apply:

Petitioner submits this conclusion [that the petitions are not barred] is compelled by the plain language of § 315(b). Notably, § 315(b) does not specify a one-year deadline that runs from the date of the first complaint served on a petitioner. Rather, it states “[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” Thus, a petition filed within 1 year of the date any complaint alleging infringement of the patent is served on a petitioner is timely under the plain statutory language of § 315(b). This is also the only reading of § 315(b) consistent with the statutory design. Congress designed the IPR authority to be option to contest validity of a patent concurrently with district court proceedings involving the same patent. A timely filed IPR proceeding in any action a patent owner elects to commence is perfectly consistent with this statutory design.

Reading § 315(b) in this manner also is the only way to effectively foreclose gaming of the system by a Patent Owner. Indeed, if § 315(b) were read to foreclose IPR proceedings in a second, independent action for infringement a patent owner elected to commence, it would unfairly foreclose use of the IPR system. For example, a patent owner could assert irrelevant claims in a first action, wait a year, and then assert different claims in a new action that do present risks to a third party. In this scenario, the patent owner would foreclose legitimate use of an IPR to contest validity of the patent claims asserted in the second action based on the third party’s reasonable business decision to not dispute validity of irrelevant claims in the first action. Rather than attempting to decipher which scenarios would be improper, the Board should follow the plain meaning of § 315(b), and find a petition timely if it is filed within 1 year of the date any complaint alleging infringement of the patent is served on a Petitioner.

Finally, reading §315(b) to foreclose this petition based on the August 2010 complaint would be particularly unjust in this case. The 1-year period following service of the August 2010 complaint expired before it was possible to submit an IPR petition – petitions could only be filed on or after September 16, 2012.

Id., Paper 1 at pp. 2-3 (emphasis in original).

But Apple had one more card to play that could avoid the entire issue of the 315(b) bar:  a request for joinder with another IPR proceeding challenging the same patent.

Apple’s Joinder Request

Apple knew that if it could successfully join another IPR proceeding, such joinder under 35 U.S.C. § 315(c) (and  37 C.F.R. § 42.122(b)) would not be subject to the one year bar under the last sentence of 35 U.S.C. § 315(b).  Apple filed its Motion for Joinder on August 21, 2013, requesting joinder to IPR proceedings by New Bay Capital, LLC challenging the VirnetX patents:

Pursuant to the authorization granted by the Panel on August 14, 2013 in Paper No. 6, Petitioner Apple Inc. (“Petitioner” or Apple) moves to have the Board join IPR proceedings IPR2013-00348 & -00349 to each other and with IPR proceeding IPR2013-00375 filed by New Bay Capital, LLC (“NBC”), each of which concerns U.S. Patent No. 6,502,135.

Id., Paper 7 at p. 1.

Apple submits that joinder of the proceedings is fully warranted. See IPR2013-00004, Paper 15 at 4; Dell v. Network-1 Security Solutions, Inc., IPR2013-00385, Paper 17 at 2-3. Joinder is proper under the statutory design of inter partes review, will simplify and reduce the number of issues before the Board and will enable streamlined proceedings (i.e., one coordinated proceeding instead of three separate proceedings). In addition, the Board can manage the joined proceeding in a way that does not impact scheduling or conduct of the proceedings. See Motorola Mobility LLC v. Softview, LLC, IPR2013-00256, Paper 10 at 2-3.

Id., Paper 7 at p. 3.

So, it seemed like Apple had two independent avenues for potential institution of IPR:  (1) an interpretation of 315(b) that would result in no bar of the petitions, and (2) joinder with ongoing IPR proceedings filed by New Bay Capital, regardless of any potential 315(b) bar.

New Bay Capital Terminates its IPRs

On November 6, 2013, New Bay Capital filed unopposed motions to terminate its IPRs (IPR2013-00375, -376, -377, and -378):

Pursuant to 37 C.F.R. §42.73(b)(4) and the Board’s Order of November 1, 2013, Petitioner New Bay Capital, LLC (“New Bay”) moves to terminate the present inter partes review proceeding. Termination is appropriate because New Bay is abandoning this contest, VirnetX does not oppose and a trial has not been instituted.

The Board granted New Bay Capital’s motions and terminated those IPR proceedings on November 12, 2013.

Apple’s IPR Petitions Denied

The Board reviewed the facts of the complaints served on Apple in the past and decided that the 2010 complaint served on Apple barred its IPR petition under 315(b).  The Board also dismissed Apple’s joinder request because the Board had recently terminated the New Bay Capital IPRs:

The timeliness limitation of 35 U.S.C. § 315(b) does not apply to a request for joinder. As such, Petitioner filed a motion to join the instant proceeding with another proceeding, IPR2013-00375, pursuant to 35 U.S.C. 315(c). See Paper 7 (“Petitioner’s Motion for Joinder of Proceedings”). Granting the motion would obviate the time bar under 35 U.S.C. § 315 (b). The IPR2013-00375 proceeding, however, has been terminated. New Bay Capital, LLC v. Virnetx, Inc., IPR2013-00375, Paper 16 (PTAB Nov. 12, 2013). Accordingly, Petitioner’s motion for joinder is dismissed.

Id., Paper 14 at p. 5.

So both of Apple’s avenues for institution of trial in these seven IPR petitions were blocked by the Board.

Reconsideration Still an Option

Even though Apple’s seven IPR petitions were denied, Apple still has the right to request reconsideration and it remains to be seen if it will file requests for rehearing.  Such requests have historically proved to be unlikely to be granted.  Other Petitioners have sought additional avenues for institution that will be discussed in a future post.

Joint Motions to Terminate Patent Reviews Late in Trial Proceedings

Friday, December 13th, 2013

One of the advantages of patent reviews under the America Invents Act is that the parties may settle before completion of the proceedings and file a joint motion to terminate these proceedings.  The Patent Trial and Appeal Board (PTAB or Board) may consider the joint motion and terminate the entire proceeding.  It has done so in several instances.

But the Board has made it clear that when settlement results in a joint motion to terminate,  it has the power to terminate the proceedings with respect to the Petitioner and maintain the proceedings with respect to the Patent Owner.  The statute governing settlement in inter partes reviews is 35 U.S.C. § 317 (a parallel one for post-grant reviews is found in 35 U.S.C. § 327):

§ 317. Settlement

(a) IN GENERAL.—An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed. If the inter partes review is terminated with respect to a petitioner under this section, no estoppel under section 315(e) shall attach to the petitioner, or to the real party in interest or privy of the petitioner, on the basis of that petitioner’s institution of that inter partes review. If no petitioner remains in the inter partes review, the Office may terminate the review or proceed to a final written decision under section 318(a).

(b) AGREEMENTS IN WRITING.—Any agreement or understanding between the patent owner and a petitioner, including any collateral agreements referred to in such agreement or understanding, made in connection with, or in contemplation of, the termination of an inter partes review under this section shall be in writing and a true copy of such agreement or understanding shall be filed in the Office before the termination of the inter partes review as between the parties. At the request of a party to the proceeding, the agreement or understanding shall be treated as business confidential information, shall be kept separate from the file of the involved patents, and shall be made available only to Federal Government agencies on written request, or to any person on a showing of good cause.

The emphasized language of the statute refers to termination with respect to a petitioner, and contemplates a situation where no petitioner remains in an inter partes review.  The corresponding PTAB rule governing settlement is 37 C.F.R. § 42.74:

§ 42.74 Settlement.

  • (a) Board role. The parties may agree to settle any issue in a proceeding, but the Board is not a party to the settlement and may independently determine any question of jurisdiction, patentability, or Office practice.
  • (b) Agreements in writing. Any agreement or understanding between the parties made in connection with, or in contemplation of, the termination of a proceeding shall be in writing and a true copy shall be filed with the Board before the termination of the trial.
  • (c) Request to keep separate. A party to a settlement may request that the settlement be treated as business confidential information and be kept separate from the files of an involved patent or application. The request must be filed with the settlement. If a timely request is filed, the settlement shall only be available: (1) To a Government agency on written request to the Board; or (2) To any other person upon written request to the Board to make the settlement agreement available, along with the fee specified in § 42.15(d) and on a showing of good cause.

The emphasized language of the rule is often cited in decisions to terminate where the Board maintains the proceedings with the Patent Owner.

Two recent decisions provide examples where the Board has terminated the proceedings with respect to the Petitioner, but not with the Patent Owner:

  • In CBM2012-00007 the Board decided to maintain the proceedings with the  Patent Owner despite terminating the Petitioner’s involvement.  Interthinx, Inc. v. Corelogic Solutions, LLC, CBM2012-00007, Paper 47 (November 12, 2013).  In this CBM, the matter was “fully briefed” and ready for oral hearing when the parties informed the Board of impending settlement.  The Patent Owner also identified ongoing litigation.
  • In IPR2013-00016 the Board terminated the Petitioner’s involvement, but maintained the proceeding with the Patent Owner.   Blackberry Corp. and Blackberry Limited v. MobileMedia Ideas, LLC, IPR2013-00016, Paper 31 (December 11, 2013).  In this IPR, the Patent Owner did not file a Patent Owner’s Response, but instead filed a motion to amend the challenged patent with claim amendments.  The Board found that “the trial issues had been fully briefed at the time the parties moved to terminate the proceeding.”

This aspect of PTAB practice is entirely different than reexamination practice, and can be used to the advantage of both Petitioner and Patent Owner, depending on the circumstances of each case.

Parties Terminate CBM Before They Settle Dispute to Avoid PTAB Decision

Monday, October 14th, 2013

In January of 2013, EZ Shield , Inc sued Harland Clarke Corp. for infringement of U.S. Pat. 8,346,637.  The ‘637 patent relates to a system for reimbursement of consumers  for losses incurred for specific forms of check fraud.  In April of that year Harland Clarke filed a petition for covered business method patent review (CBM2013-00016).  In July, EZ Shield (the Patent Owner) filed its Preliminary Response.  The Preliminary Response details how Harland Clarke (Petitioner) was allegedly a former licensee of the patent and a customer of EZ Shield for more than two years.  The Preliminary Response alleges that Harland Clarke breached its agreement and offered a competing product for sale.  EZ Shield even included a table detailing the alleged patent infringement by Harland Clarke’s competing product.

Apparently, the parties were discussing settlement and by late September they decided to contact the Board to discuss the possibility of having it delay its decision on institution of the CBM petition.  On September 27, 2013, the parties conducted a telephone conference call with the Board to discuss the possibility of delaying or suspending the issuance of the Board’s decision on whether to institute review.  On September 30, 2013, the Board denied the joint request to delay or suspend, citing its need to provide a just, speedy and inexpensive resolution of every proceeding (37 C.F.R. § 42.1(b).)  The Board did authorize the parties to file a joint motion to terminate the proceeding with a true copy of the parties’ settlement agreement in connection with the termination of the proceeding as required by 35 U.S.C. § 327(b) and 37 C.F.R. § 42.74(b).

On October 4, 2013, the parties filed a joint motion to terminate with a copy of their Settlement Agreement (Exhibit 2016) under which the parties agreed to terminate the CBM without prejudice to Harland Clarke “in the event that the Parties are unable thereafter to negotiate a mutually agreeable settlement of [the litigation].”  The Board granted the motion on October 7, 2013, and terminated the CBM.

Of course, now that the CBM is terminated we will never know if the Board would have instituted trial or not based on the documents of record.  The Settlement Agreement states that the parties have not yet settled their dispute and that the District Court agreed to stay the litigation until November 22, 2013, so it will be interesting to see whether the parties settle by then.  Obviously, settlement must be imminent or Harland Clarke would not have agreed to termination of the CBM, since it will cost at least another 6 months and an additional PTO filing fee to re-file the CBM should things not work out.  Regardless, this matter demonstrates one advantage of AIA patent trials which allow for early termination by joint motion of the parties, as opposed to reexamination which does not offer that feature.

PTAB Grants Motion for Early Termination of Proceeding Before CBM Trial Institution

Tuesday, July 30th, 2013

The Patent Trial and Appeal Board recently decided to grant a motion to terminate a CBM proceeding prior to a decision of whether to institute trial in that CBM proceeding.  In CBM2013-00015, between Oracle Corporation (Petitioner) and Community United IP, LLC, (Patent Owner) concerning U.S. Pat. No. 5,862,223, the parties filed a joint motion to terminate during the preliminary proceeding, that is, before a decision of whether to institute trial was made by the Board.

A “proceeding” is defined as a “preliminary proceeding” or a “trial.”  37 C.F.R. § 42.2.  A “preliminary proceeding”  is the portion of the proceeding which begins with the filing of a petition and and ends with a written decision as to whether a trial will be instituted.  A “trial” is instituted if the Board grants the petition to review a patent.  Joint motions to terminate by parties can be filed during the preliminary proceeding or during trial (before termination of the trial) pursuant to 35 U.S. C. 327, 37 C.F.R. §§ 42.72 and 42.74.

Oracle and Community United submitted their settlement agreement with the joint request to have it treated as confidential business information under 35 U.S.C. § 327(b) and 37 C.F.R. § 42.74(c).  The Board granted the motion to terminate and the motion to treat the information as confidential business information:

Generally, the Board expects that a proceeding will terminate after the filing of a settlement agreement. See, e.g., Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48768 (Aug. 14, 2012). Oracle’s petition was filed on April 2, 2013, and Community United has not yet filed its Preliminary Response. The Board has not yet determined whether a covered business method patent review should be instituted.

The Board was also careful to document what the Petitioner represented it would not do if the motion to terminate was granted:

Oracle represents that it will no longer participate, even if the Board institutes a covered business method patent review and commences a trial. That means even if a covered business method patent review is instituted, Oracle will not file a reply to any Patent Owner Response or an opposition to any Motion to Amend Claims. Oracle also will not be conducting any cross examination of Community United’s witnesses. Also, because of non-participation of Oracle, Community United may not have an opportunity to cross examine Oracle’s witnesses whose testimony are relied on by Oracle’s petition.

Of course, proceedings can settle at any time before a final written decision by the Board; however, proceedings like these which resolve so quickly will greatly reduce the statistical average time from filing to termination of post-grant proceedings, making them an even more attractive resolution mechanism than what is anticipated under the statutory time periods for completion set forth in the America Invents Act (currently capped at 1 to 1.5 years from institution of the patent review to a final written decision by the Board).

 

Early Termination of PTAB Proceeding Shows Versatility of PTAB Patent Trials

Wednesday, May 8th, 2013

One of the criticisms lodged against traditional reexamination proceedings is that when a request for reexamination is filed, the proceeding may take on a life of its own and typically cannot be withdrawn even if the parties want to dismiss the action.  The AIA provides for patent office trials with more options for parties, because they can move to request termination of the action before a final decision by the Board.  However, the Board is not a party to a settlement and has independent powers to determine jurisdiction and patentability.

The rule lays out the requirements for settlement:

37 C.F.R. § 42.74 Settlement.

(a) Board role. The parties may agree to settle any issue in a proceeding, but the Board is not a party to the settlement and may independently determine any question of jurisdiction, patentability, or Office practice.

(b) Agreements in writing. Any agreement or understanding between the parties made in connection with, or in contemplation of, the termination of a proceeding shall be in writing and a true copy shall be filed with the Board before the termination of the trial.

(c) Request to keep separate. A party to a settlement may request that the settlement be treated as business confidential information and be kept separate from the files of an involved patent or application. The request must be filed with the settlement. If a timely request is filed, the settlement shall only be available: (1) To a Government agency on written request to the Board; or (2) To any other person upon written request to the Board to make the settlement agreement available, along with the fee specified in § 42.15(d) and on a showing of good cause.

Settlements have already begun in PTAB proceedings.  An early settlement was negotiated after filing of an inter partes review petition, but before institution of proceedings in Komatsu America Corp. v. Leroy G. Hagenbuch (IPR2013-00130 relating to U.S. Pat. No. 7,039,507).  Komatsu filed a petition for IPR on January 29, 2103, challenging claims 2, 4-7, 13-18, and 25-36 of the ’507 patent.  The Patent Owner had until May 4, 2013 to file a preliminary response, but instead the parties settled their action in a parallel district court proceeding and filed a joint Motion to Terminate the IPR on April 30, 2013.  The motion included copies of the district court settlement and a copy of the confidential settlement between the parties.  The parties also included a motion to keep the settlement business confidential information pursuant to the rule.  The Board granted the request for confidentiality and terminated the proceedings on May 6, 2013, which was prior to institution of proceedings.

Of course, the prior art cited against the ‘507 patent is now publicly available due to the filing of the IPR petition, so that may affect the practicality of future enforceability of the ‘507 patent, but the parties have avoided legal estoppel due to termination of the proceedings before any final written decision by the Board.  (37 C.F.R. § 42.73)  This case is an example of how early termination of AIA post-grant proceedings can follow settlement, saving the parties and the Board further time and expense.